Cover IMF Working Papers
Buy Book in Print
Financial Distortions in China: A General Equilibrium Approach
Author:
Diego Anzoategui null

Search for other papers by Diego Anzoategui in
Current site
Google Scholar Close
,
Miss Mali Chivakul
Search for other papers by Miss Mali Chivakul in
Current site
Google Scholar Close
, and
Wojciech Maliszewski null

Search for other papers by Wojciech Maliszewski in
Current site
Google Scholar Close
Series:
IMF Working Papers
Volume/Issue:
Volume 2015: Issue 274
Language:
English
Publication Date:
24 Dec 2015
DOI:
https://doi.org/10.5089/9781513565149.001
ISBN:
9781513565149
ISSN:
1018-5941
Pages:
31
Keywords:
WP; Financial distortions; interest rate liberalization; implicit government guarantees; China; lending interest rate; cost of funds; deposit interest rate liberalization; deposit interest rate ceiling; bank depositor; deposit ceiling; equilibrium interest rate; deposit interest ceiling; interest rate controls-is; SOE sector; liberalizing deposit interest rate; Deposit rates; Interest rate ceilings; Credit; Commercial banks; Total factor productivity; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
Download PDF (4 MB) Download Epub
Widespread implicit guarantees and interest ceilings were major distortions in China’s financial system, contributing to a misallocation of resources. We analyze the impact of removing such frictions in a general equilibrium setting. The results show that comprehensive reforms generate better outcomes than partial ones: removing the deposit rate ceiling alone increases output, but the efficiency of capital allocation does not improve. Removing implicit guarantees improves output through lower cost of capital for private companies and better resource allocation.
  • Collapse
  • Expand
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund